Fixed Income

October 16, 2018

The global environment of rising interest rates continued to hurt Ukrainian sovereign Eurobonds last week, with investors seeking higher risk premiums, leading to selloffs across most emerging market debt. Also, the International Monetary Fund lowered its global growth outlook in its October update by 0.2 percentage points to 3.7% each for 2018 and 2019. In economic news, Ukrainian consumer inflation jumped by 1.9% in September, but 12-month headline inflation remained under control near 9% due to the seasonal nature of the price hikes. In major political news, Ukraine secured approval from religious authorities in Istanbul to establish an independent church, in what President Poroshenko called a vital step against Russian interference in Ukraine’s affairs. The Russian Orthodox church has long been a hostile actor against the Ukrainian state, allowing itself to be used as a tool of the Kremlin to justify Russian imperialism.